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AICPA Four-Step Process to Obtain Access to CPA Workpapers
Updated as of 6/11/15
Best Practices: Insurance Regulator Access to Audit Documentation
Updated as of 8/31/15
Model Audit Rule Implementation Guide
Updated as of 4/13/15
The NAIC/AICPA Working Group addresses financial solvency issues and works with the American Institute of Certified Public Accountants (AICPA) on various issues.
The Executive Committee/Plenary has adopted as final the revisions to the Annual Financial Reporting Model Regulation (the Model Audit Rule). The revisions relate to auditor independence, corporate governance, and internal control over financial reporting. The following is a summary of the revisions.
—The adopted revisions reduce the number of consecutive years an audit partner may participate on the audit of an insurer and also lists various non-audit services that auditors may not provide to an insurer in order to maintain its independence. Realizing that it may be difficult for small insurers to comply with the prohibited services requirement, a small company exemption is included that indicates that those insurance companies with less than $100 million in direct written and assumed premium may request an exemption from this requirement.
—The adopted revisions require that insurance companies have an audit committee that is solely responsible for the appointment, compensation and oversight of the company’s auditor. The guidance also indicates that some audit committees, based on the insurer’s premium volume, would need to be comprised of a certain percentage of individuals that are independent from company management. Companies meeting certain requirements may request an exemption from its domiciliary commissioner based on hardship. The effective date in the model is January 1, 2010.
—The adopted revisions require that insurance companies with $500 million or more in direct and assumed premium file a report with the state insurance department regarding its assessment of internal control over financial reporting. This report will include a statement by management whether these controls are effective to provide reasonable assurance regarding the reliability of the statutory financial statements and disclosure of any unremediated material weaknesses in internal control over financial reporting. The independent certified public accountant should consider this report during the planning and performance of the annual audit. In addition, the proposed revisions require the insurer to file with the state insurance department the independent certified public accountant’s communication regarding any unremediated material weaknesses noted during the course of an audit. The effective date in the model is December 31,2010.
The Working Group and Financial Condition (E) Committee have adopted an Implementation Guide designed to assist insurers in complying with the new requirements included in the amended Model Audit Rule regarding auditor independence, corporate governance and internal control over financial reporting. It is intended to be interpretative guidance only and will be included as an appendix to the Accounting Practices and Procedures Manual.